Sony Ericsson turns profit with Android focus and cost cutting

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Sony Ericsson returns to profitability in 2010 with Android smartphone focus, at expense of 4,000 jobs and certain production facilities, but sales and market share slip

Sony Ericsson posted profitability for 2010, and profitability in each consecutive quarter, a consequence of its aggressive staff cut backs, reduced production costs, slimmer portfolio and focus on Google’s Android system.

Its total handset shipments reduced 23 per cent in the year, from 57.1 million in 2009 to 43.1 million in 2010. Market share dropped with it.

It said it had shipped over nine million Android-based Xperia handsets globally since launch.

Sales revenue dropped also, from 6,788 million to 6,294 million.

But its average selling price, gross margin and profitability jumped on the back of its restructuring and focus on higher-end Android smartphones.

The company has axed 4,000 jobs axed across its business alongside several production facilities.

Its Android handsets garnered an average trade price of €146 in the period, compared with €119 for its 2009 range.

Operating expenses were reduced by over €880 million, it said, at a cost €381 million.

Margin was up to 29 per cent in the full year, compared with 15 per cent in 2009.

Income before taxes, excluding restructuring charges, was €189 million for the full year 2010, compared with a loss of €878 million in 2009.

It repaid its €150 million loan facility in full in the fourth quarter.

Sony Ericsson president and chief executive Bert Nordberg (pictured) said: “2010 was a turnaround year for Sony Ericsson. Our four consecutive quarters of profit reflect the success of our shift towards an Android-based smartphone portfolio.

“We will celebrate the 10th anniversary of the creation of Sony Ericsson in 2011, and as shown by the recently announced Xperia Arc, we will continue to focus on delivering the most entertaining smartphones worldwide.”

The company predicted modest growth in 2011.

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